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Recession is nothing new for Michigan


  • Photo 1 of 9

    The Bomber Restaurant in Ypsilanti, Mich. It's named for the former Willow Run bomber plant up the road. During World War II, Ford built the plant to crank out B-24 military aircraft.

    - Amy Scott / Marketplace

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    John Sebastian owns the Bomber Restaurant. He says business rises and falls depending on the price of gas. Right now he suspects customers are holding onto any money they have.

    - Amy Scott / Marketplace

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    A sign at the Bomber Restaurant.

    - Amy Scott / Marketplace

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    Travis Smerdon, left, and Sean Hoydic call themselves political sparring partners. But both agree Michigan officials aren't doing enough for the state economy.

    - Amy Scott / Marketplace

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    Jim Kovach, left, and Andy Grohowski at the Bomber Restaurant in Ypsilanti, Mich. Kovach says he sees the recession in the state by the lack of commuters on their way to work.

    - Amy Scott

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    Another empty business in Ypsilanti, Mich.

    - Amy Scott / Marketplace

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    A sign outside the UAW office in Canton, Mich.

    - Amy Scott / Marketplace

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    A sign of recession near Ann Arbor, Mich.

    - Amy Scott / Marketplace

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    Cierra Mitchell is a senior at the University of Michigan in Ann Arbor. She's worried about her ability to find a job when she graduates.

    - Amy Scott

TEXT OF INTERVIEW

KAI RYSSDAL: Our New York Bureau Chief Amy Scott has been working out of her car for the past week or so. She and our colleague, Tess Vigeland, have been on matching trips trying to find out whether Wall Street and the credit crisis have helped send America down the Road to Ruin.

The three of us are going to meet up in St. Louis the day after tomorrow for a special broadcast from there. But in the meanwhile, Amy, it's been a couple of days. Last we knew you were in Youngstown, Ohio, I think. Where you been since?

PERSON: Well, from Youngstown I headed even deeper into car country, into the Detroit area. I started out at the University of Michigan in Ann Arbor, where I talked to students about how they were feeling about the economy and their futures. And I found that the closer they were to graduation the more freaked out they were.

Cierra Mitchell is a senior psychology major.

CIERRA MITCHELL: Gas prices are high. Food is high. It's hard to get a loan, you

know, for school -- things like that. And my credit-card bill, the interest rates are a lot higher now. Like, overnight, it seemed like it just shot up real fast, so . . . .

SCOTT: So, it's a pretty scary time to be striking out on your own.

RYSSDAL: Yeah, I can't even imagine. Listen, there is talk out there about the "R" word, the recession. One of the reasons we sent you to Michigan, though, was to find out what a state that is, arguably, already in recession looks like. What are you seeing?

PERSON: I've seen a lot of For Rent signs, vacant buildings, um, and relics from what used to be a thriving auto and manufacturing industry. I stopped in a place called the Bomber Restaurant in Ypsilanti. It's named for the Ford Willow Run plant down the road that made B-24 bombers during World War II. And I talked to Jim Kovach, who installs security systems for corporations. He says not only is his business slow -- he says customers are reluctant to spend money right now -- but he says he can really see it on the road.

JIM KOVACH: Probably half to 60 percent of my days are spent on the freeways. And I can judge by how well people are doing by how many people are on the freeways in the morning trying to get to work. And lately in the last couple months it's just been dwindling.

SCOTT: Now, Kai, that may have a lot to do with gas prices, of course. But Kovach believes that with so many layoffs, fewer people are simply on their way to work. And, in fact, just after I talked to him I met a few people who had just lost their jobs. One of them was Steve Granke, who had been working for a supplier to the Big 3 auto companies.

STEVE GRANKE: I'm a product engineer and I recently got separated from my company on September 8th. And I had already two other jobs lined up, but both of them failed because they started laying people off.

SCOTT: Granke said he's hoping to get out of the auto business altogether.

RYSSDAL: Hmmm. Let me change gears on you here for a second, Amy, and ask you about a bailout -- but not the big one we've all been talking about. Congress just passed $25 billion in loan guarantees for the auto industry. How's that playing over there and what are people saying?

PERSON: Right. These low-interest loans are supposed to help the industry transition to more-fuel-efficient vehicles. And supporters say the money could help keep some jobs in Michigan. But, you know, $25 billion? GM lost more than that last year. The Michigan economy has been so battered, I think people are saying it will take more than revitalizing the auto industry to get things back on track.

RYSSDAL: Hmmm. And you are heading back out on the road this afternoon. Where are you going?

PERSON: Well, I've made it to Cincinnati already, where I just talked to a car dealer who's looking at closing down his business, if things don't improve for him. I've put about 1,200 miles or so on my rental car and I've got another 350 to go to St. Louis.

RYSSDAL: And we will see you there on Friday. We will be doing the broadcast from KWMU in St. Louis. Amy Scott, out there looking for the Road to Ruin. Thanks, Amy.

PERSON: No problem. See you there.

About the author

Amy Scott is Marketplace’s education correspondent covering the K-12 and higher education beats, as well as general business and economic stories.
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Funny to look back at Ypsi, from the vantage point of a rat who swam frantically from the sinking ship, and see the same fights going on. We sold our house on Huron St and moved to California in July, escaping the bad weather and outrageous property taxes (about twice the rate in Ypsi vs LA) for fire and earthquakes, and thankful for the bargain.

Steve Pierce is generally right, but is fighting against forces that are now too big for him (economic, not political, Steve - better luck in the next mayoral run). And Richard Murphy is, at best, a Polyanna. At worst...well...let's just say Polyanna. We bought our house in Ypsi in 2004 partly based on city propoganda that indicated the Water Street project would be completed within 2 years. No progress, and a lot of water (pun intended) under the bridge since then including the loss of the developer.

Bottom line, Ypsilanti is a poorly run city that is taxing its largely middle-class populace to its knees (I'm a Democrat, if it matters to anyone). And Water Street debt is about to exacerbate the problem. Water Street was a wonderful idea, but took a great risk with the people's cash at the absolute wrong time, and came up snake eyes. No saving it.

Whatever. Michigan is economically doomed. They can't enter the coming (current?) recession in the position they are in and come out okay. And with people like Richard Murphy grinning like PT Barnum and pitching the mouldy Chamber of Commerce line, it will only be made worse. The scorching of Michigan's earth may at least do one thing: shut the shills up.

I have a great deal of respect for City Planner Richard Murphy, he has done some great things now that he is the lone planner in the department. But in this case he has been drinking the economic development kool-aid and failed to discuss the real reasons both of these buildings are vacant.

The vacant building in your photo gallery is part of the 40 acre Water Street Project. It did have a thriving business there. It was Wireless Toys, one of the fastest growing independent retailers for mobile phone sales in the region.

The reason the building is vacant is because of the failed policies of Murph's previous boss as well as the former Mayor that bought these buildings with tax dollars and threat of eminent domain. The City kicked out the owners because the City wanted to redevelop the property. But the Water Street project stalled and the city now owes nearly $30 million and no way to pay it back except to cut services or raise taxes.

The second vacant building, called the Thompson Block, is also another fiasco made worse by city fathers hell bent on trying to make things better but through incompetence made it worse.

The building was owned by a notorious landlord now in prison for dumping sewage into our river. The City went to war with this landlord and got a court order to take the property away. But then through a series of missteps by the city, the property is now owned by a new owner that can't raise the money to fix-up the property. Today the building today is in worse condition then when it was taken over by the City.

So while neither of these specific buildings are likely vacant because of the slowing economy, they are vacant because of the incompetence and failed policies of our civic leaders.

It must be said, these same civic leaders have regularly blamed the economy for the problems at Water Street and Thompson Block for why these buildings remain vacant.

So Marketplace was correct when pointing to the economy, its impact and its outward signs in Ypsilanti.

However, our city fathers have never accepted that they had any role in these two failures, but were always quick to blame the economy.

I lay the blame at the feet of these same city fathers that used risky and speculative tax financed real estate speculation that depended on an overly optimistic view that the housing boom would continue forever.

When it didn't, their scheme fell apart and the taxpayers are saddled with millions of dollars of debt and the highest tax rate in the region.

Amy,

Thanks for stopping through Ypsi! I wanted to offer a few comments on your photo gallery - specifically, photos #6 and 8, referred to as "an empty business" and "a sign of recession".

It may not be obvious to the casual observer on a 1,500 mile road trip, but these shots are nowhere near as depressing as they might be. The "empty business" is not empty because of economic conditions - it's a building that's empty because it's part of a brownfield redevelopment project that's underway.

Similarly, the building shown as a "sign of recession" is on the way up, rather than down. The Civil War-era structure has been the victim of past years of neglect, but currently has plans in place for rehabilitation as retail, restaurant, and loft space, with pre-leasing underway. As might be imagined from looking at it, they plan to make use of Michigan's "Obsolete Property Rehabilitation" incentives.

I'm pleased that the worst pictures you could take of Ypsilanti were shots of positive action! Let me know if I can help with anything else.

Richard Murphy, City Planner
City of Ypsilanti

Amy,

Thanks for stopping through Ypsi! I wanted to offer a few comments on your photo gallery - specifically, photos #6 and 8, referred to as "an empty business" and "a sign of recession".

It may not be obvious to the casual observer on a 1,500 mile road trip, but these shots are nowhere near as depressing as they might be. The "empty business" is not empty because of economic conditions - it's a building that's empty because it's part of a brownfield redevelopment project that's underway.

Similarly, the building shown as a "sign of recession" is on the way up, rather than down. The Civil War-era structure has been the victim of p

You should see Detroit and Hamtramck. Soo lonely... you get soo depressed...

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